Thanks to Michael for what appears below.

//Cecchetti, Stephen G. et al. 2000. Asset Prices and Central Bank
Policy
(Geneva: International Center for Monetary and Banking Studies.
    13: " ... central banks can improve macroeconomic performance by
reacting
systematically to asset prices ....  [T]he mean reason for this is that
asset price bubbles create distortions and investment and consumption,
leading to extreme rises and falls in both output and inflation.
Raising
interest rates modestly as asset prices rise above what are estimated to
be
warranted levels ... helps to smooth these fluctuations are reducing the
possibility of an asset price bubble coming into existence in the first
place."

Michael Perelman//



But this only perplexes me further. Asset prices indirectly affect the
real sector by distorting allocation. Taylor rules don't refer to
allocative distortions. This passage also falls a long way short of
including asset prices formally in a policy rule.

So is my original conjecture right? Those who complain (e.g. The
Economist, for a decade, I am told) about the Fed's easy money inducing
an asset boom do not have any analytical framework. Do they simply
believe viscerally that sooner or later something nasty will happen if
money supply figures grow rapidly? Is there is a cogent Austrian
underpinning to the claim that Greenspan messed up, and is there a
source for this that someone could suggest?

And what of Roger Sandiland:

// Interest rate policy impacts both the GDP price index and the index
of asset price. But what if these two indices are moving in opposite
directions? //


In Australia, our Reserve Bank noted that fiscal policy needed to be the
second instrument (a capital gains tax).

 From an HET view, did Fisher's P stability rule account for asset prices
or the possibility that output and asset prices may move in different
directions?

In short, does HET provide support for the claims widely taken as
self-evident that it is monetary policy (i.e. not market failure as in
Keynes, Ch. 12) that lies at the source of the GFC so far as the
Fed-created asset bubble led to the subsequent creation of derivatives
and the like?

Bruce Littleboy